Stocks closed lower Tuesday, with the S&P 500 posting its third straight losing session, as a jump in bond yields threatened the bull market.

Traders also monitored the oil market following President Donald Trump’s cancellation of planned attacks on Iran.

The S&P 500 closed down 0.67%, ending at 7,353.61, while the Nasdaq Composite finished 0.84% lower at 25,870.71. The Dow Jones Industrial Average shed 322.24 points, or 0.65%, to close at 49,363.88.

Volatility in the bond market added a new wrinkle to the bull market. The 30-year Treasury yield briefly topped 5.19% on Tuesday for its highest level in nearly 19 years. The 10-year Treasury note yield — a critical gauge for mortgage and auto loans and credit card debt — rose to 4.687% at one point, marking its highest level since January 2025. 

The rate increases come after a series of reports last week showing inflation was revving back up as the war in Iran lifted oil prices. Higher rates on things like credit cards and mortgages rates could curb consumer spending. Meanwhile, the rise in rates could temper long-term economic growth and expose the sky-high valuations seen recently in some chip stocks.

“The bond vigilantes are at play right now,” said Will McGough, chief investment officer at Prime Capital Financial. “Everybody’s on to energy prices staying higher, which could lead into inflation that’s behind the curve a little bit.”

Bond vigilantes are institutional investors who sell off government bonds to signal their disapproval of inflationary U.S. monetary policies.

McGough added that investors could be sending a message that the Federal Reserve is behind the curve on inflation ahead of Kevin Warsh’s swearing in as chairman of the central bank on Friday.

“There’s this narrative that new Fed chairmans tend to get tested by the markets,” McGough told CNBC. “You could see the bond vigilantes were obviously testing him here, if you believe that theme.”

Crude prices were down slightly on Tuesday after President Donald Trump announced late Monday that he was calling off a plan to attack Iran after the heads of three regional powers in the Middle East asked him to “hold off.” U.S. West Texas Intermediate futures for June delivery shed 0.82% to settle at $107.77 per barrel. Meanwhile, international Brent crude futures for July delivery fell 0.73% and settled at $111.28 per barrel.

Later in the session, the U.S. reportedly seized overnight an oil tanker linked to the Islamic Republic in the Indian Ocean, according to three U.S. officials who spoke with The Wall Street Journal.

Nvidia, which reports its fiscal first-quarter earnings after the bell on Wednesday, closed down nearly 1%. Qualcomm ended the session off nearly 4%, while Broadcom pulled back 2%.

“This is a well-deserved breather after an epic rally,” Jed Ellerbroek, portfolio manager at Argent Capital Management, told CNBC. It’s an “interesting time for the reversal, with it coming just a few trading days before the biggest chip stock in the world reports what will be outstanding earnings and guidance,” he added.

Stocks had been on a tear before the past few sessions, with the S&P 500 and Nasdaq hitting fresh record highs last week, and the Dow briefly recapturing the 50,000 level.